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Tuesday, 15 November 2011

Investment advisor expands on why we should Occupy the Bell Centre

When I picked up
a copy of La Presse recently and saw Montreal investment dealer David
Ipperciel’s proposal to “Occupy the Bell Centre” I was really intrigued. I have found the salaries being paid to
professional athletes revolting for some time. In the case of the Canadiens, I
was shocked to see former GM Bob Gainey trade for past his prime $7.3 million a year forward Scott Gomez and then give Mike
Cammalari ($6 milllion) and Brian Gionta
($5 million) annual contracts beyond their worth. Yes, as my good friend Abe
Hefter from CJAD always reminds me, “Gainey got Gomez in order to attract free
agents like Cammalari and Gionta.”

David Ipperciel

Even if Gomez
scored 30 goals, I’d have a problem with the salary he is making. Pierre
Gauthier, Gainey’s successor and the man most likely truly responsible for us
being saddled with Gomez, gave defenceman André Markov a three year $17 million
contract last summer when there was no clear indication if his bad knee
could hold out. As of today, he has yet
to play a game all season.

True, this is
owner Geoff Molson’s money. He spent
$500 million to buy the Habs. It is a business. Nobody is forced to buy tickets or souvenirs or watch the team
play on television. Professional sports is entertainment. People do not
complain about Daniel Radcliffe or Julia Roberts making $20 million per movie.

Here is a
translation Ipperciel sent me of his piece in La Presse:

I work in the financial sector in
Montreal and feel that much attention is directed towards our industry
following the Occupy Wall Street movement.
Being of a generous nature, I would like to share this attention with others.

I propose a new movement: Occupy
Bell Centre. People complain about the high level of salaries in the financial
sector, far above the average pay.
However, the income of professional athletes is clearly higher than those
of my peers. How dare they extract such
compensation! After all, they only play
a game, often in an unruly way... Worse
yet, half the teams perform below the median of their league! How can they justify their astronomical
salaries in those conditions?

Many will quickly point out than
the financial sector of Wall Street had to be bailed out (not in Canada, but
who’s noticing). To those, I must recall
that every penny paid out by the US government to the financial sector through
the TARP program was reimbursed. At the
end, the program did not take away money from the American taxpayer.

On the other hand, professional
sport teams are able to build arenas with the help of public funds, and often
benefit from tax rebates or exemptions.
In contrast, the financial sector is one of the biggest contributors to
government tax receipts, through corporate or personal tax, topped by a special
payroll tax targeted specifically to them.

We can also expect to see new
financial regulations implemented soon (Bâle, Volkner Rule). In the hockey world, the legitimacy of
violence is still being debated. In this
context, Occupy Bell Center is probably not a bad idea.

Or why not Occupy Capitol Hill? The
governments have been important contributors of the financial crisis. In the US, minimal targets for low income
families were imposed by Congress to Fannie Mae and other agencies, in order to
boost home ownership. This helped
develop the subprime market which led to the debacle. The Chinese government manipulated the yuan’s
exchange rate, which encouraged over-consumption all over the world, and
launched the risk-seeking frenzy that followed because of the lower rates that
it generated. The Federal Reserve
contributed by keeping rates too low for too long. And more important, European governments
exacerbated the crisis with their unrestrained accumulation of debt,
threatening our social democracy. Let us
join in this popular indignation by occupying all these places!

I spoke to Ipperciel some more about his article. He agreed his tongue
was planted firmly in cheek.

“No, I don’t
think an Occupy Bell Centre would work,” he conceded. “The whole ‘Occupy’
movement attracts sympathy because of
its vagueness, so that everybody can relate. An Occupy Bell Centre would have a more specific demand (
such as lower salaries which would bring a more polarized debate. In any
case, I was being facetious. People are quick to denounce the big
salaries of financiers. If the salaries are too big, then why not
criticize anybody else with a huge salary, like professional athletes?

“I really have
no problem in principal against the high salaries of professional
athletes. I say in principal, because in practice, professional teams
have become experts in blackmailing governments for handouts, whether for
building a new amphitheater, or tax credits. I’m sure you can come up
with examples in hockey or Formula One. Would the salaries of these
professionals be as high without government aid? Probably not. What
they attract -or extract- from their
talent or the perceived attractiveness of their product, they entirely
deserve. They are not putting a gun to anyone’s head to buy their tickets
or watch them on TV. They deserve what they get from fans.

"I just
have a problem with what they get from government. From what I
understand, the Montreal Canadiens have paid for the Bell Centre without
government aid, and they pay full taxes every year on it. So whatever
salary they pay to their team is their business, as they must remain
competitive. As for Scott Gomez, they made a bet, and do not seem to have
gotten a good return on their investment. As a citizen, I have no
problem. As a fan, I can’t be too happy. But that is the nature of the game. Regarding the
whole pro hockey scene, we should all be outraged as long as there is
government involvement, using our tax money to make millionaires even richer?
Come on! The funny thing is that the Americans - supposedly capitalists -
seem more prone to this than Canadians - supposedly socialists. Go
figure."

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